Indra’s Drishtikona (Viewpoint)

Why Must Wal-Mart Come?

Posted : November 30, 2005 at 5:51 pm [IST]

I don’t know when all economists are recommending FDI in retail sector as necessary for India, why are leftists and some others are opposing it. And then in globalizing and liberalizing world of business, how long can they hold their fort? And will it really affect the smaller fishes in the sea and the common people of India? Like many, I don’t think their presence will affect the country in any negative manner. However, the benefits will be manifold.

But my reason for this recommendation is different. I am amazed by the pioneer management practices of these global retailers, and strongly recommend the competition in India to adopt that. Wal-Mart has been the best in supply-chain management and practices, almost like the Toyota Production Systems in auto sector.

Indian retailers can learn the ultimate- how far an efficient supply chain management can make business competitive. I am impressed of its use of RFID technology. Wal-Mart’s quest to use radio frequency identification (RFID) technology to track shipments is one such pioneer technology application. Last year, Wal-Mart pushed its 100 largest suppliers to attach RFID tags to some of their shipments, and by January, 200 of its second-tier suppliers will begin tagging cases and pallets with the chips. These smaller 200 suppliers could benefit even more from RFIDs than the large suppliers, as the smaller suppliers are more apt to run out of inventory in Wal-Mart’s warehouses when items sell more quickly than planned, and there’s no good way for them to track that now. RFID may still require some reduction in price to get universal acceptance. Indian industry and business must explore its application and use it too.

Wal- Mart can never affect the small grocery shops or retailers, as it can’t have that much of penetration for many years to come. Nowhere has it happened.

I am confident of Indian manufacturers to remain competitive in cost as well as quality. Many a times, the prices for the consumers are high because of the absence of competition among vendors. And a supplier to local Wal-Mart outlet, they will go for the scale also that today they never bother.

These global brand retailers will create employment in their outlets and in many other essential services in the supply chain and in the factories and fields of its vendors. The employees may expect a lot better compensation also as it has happened in auto sector.

Our Prime Minister, himself an economist of repute understands the need of opening up of FDI in retail sector, but he has failed to bring the leftists on his side. He wishes to take India on a growth path of 10% in GDP for fastest alleviation of poverty in the country. Unfortunately, he is still talking of building consensus on the issue with no time frame. And naturally the loser is the country and its people. On some issues such as this, he must move ahead even with certain risk of dissention.

- Indra

Category: Government Policy/Administration |